CLSA Foreign individual property ownership update

Local media reports that foreigners older than 55 years are may be allowed to buy landed property. Other terms include: 50% of the house purchase needs to be paid in cash, while the remaining 50% is allowed to be mortgaged but not for more than 3 years. Comment: The Ministry plans to announce this revision during the real estate conference in Bali in May2010. Our recent meeting with the Minister concludes that government is keen for this revision to be made effective; however there are many supporting regulations that need to be in place. Under current law, foreign individuals can buy property under “Right to Use” title which grants ownership for an initial 25 years. The new law is also likely to still impose restrictions such as a minimum purchase price for foreign buyers or the type of property that can be bought (i.e high rise only, except for special cases such as mentioned above) and the minimum price of the property. Developers of high rise property will enjoy some benefit from this, such as Ciputra Development (CTRA IJ with its Ciputra World mega block), Bakrieland Development (ELTY IJ with Rasuna Epicentrum mega block) and Lippo Karawaci (LPKR IJ; St.Moritz and Kemang Village).